Bernstein: SMMT's HARMONi-3 trial expected to fail; target price lowered to $7.70

Overview

This report analyzes Summit Therapeutics Inc.'s (SMMT) ongoing HARMONi-3 trial and compares it with Akeso’s HARMONi-6 trial conducted in China. The report concludes that HARMONi-6 results hold no reference value for global Phase III trials and expects the HARMONi-3 trial in non-small cell lung cancer (NSCLC) to fail to demonstrate statistically significant overall survival (OS). Accordingly, the report maintains its 'underperform' rating on SMMT and assigns a target price of $7.70.

Core views

The core view of the report is that the HARMONi-3 trial is unlikely to show statistically significant improvement in overall survival among NSCLC patients. The primary reasons are significant differences in trial design and patient selection compared to historical global PD-1+VEGF Phase III trials—particularly the exclusion of patients over age 75 and an extremely low proportion of female patients (only 3.8%), versus approximately 33% in historical global trials. Additionally, the report notes that the progression-free survival (PFS) hazard ratio (HR) for HARMONi-3 is greater than 0.67–0.71, substantially higher than the HR=0.60 reported in Akeso’s China-based HARMONi-6 trial. Based on this data, the report anticipates that the OS HR for HARMONi-3 will also fail to meet the pre-specified statistical boundary, leading to trial failure. The report also suggests that even if HARMONi-3 yields a positive result, its clinical relevance would likely be limited, thus minimizing market impact. Consequently, the report has lowered its revenue forecasts for SMMT and adjusted market share assumptions to reflect intensified competition and technological barriers. Specifically, it expects SMMT’s penetration in the global market—particularly in first-line NSCLC treatment—to fall short of prior expectations.

Analysis framework

The report employs multiple analytical approaches to assess the prospects of the HARMONi-3 trial. First, it compares key design differences between HARMONi-3 and HARMONi-6, especially regarding patient eligibility criteria. Next, it uses external data to analyze the PFS hazard ratio of HARMONi-3 and projects trends for its OS hazard ratio. Finally, it applies a DCF valuation model, incorporating discounted future cash flows, to arrive at a $7.70 target price. The report also provides a detailed analysis of SMMT’s financial condition, including changes in revenue, costs, and profit margins, benchmarked against industry peers. These analyses lead to the conclusion that SMMT will continue to incur losses over the next few years.

Methodology notes

• Industry/Sector Analysis Framework

  Differences in patient selection across clinical trials may lead to divergent efficacy outcomes

  The report points out that significant differences in patient eligibility criteria between HARMONi-3 and HARMONi-6—such as upper age limits and gender distribution—may render their efficacy results incomparable.

• Valuation MethodDCF (Discounted Cash Flow)

  DCF valuation model used to calculate target price

  The report applies a 12% weighted average cost of capital (WACC) as the discount rate to project future cash flows, resulting in a $7.70 target price for SMMT. The DCF model accounts for multi-year cash inflows and outflows without assuming any terminal growth.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• SMMT.US

  Negatively Impacted

  Weaknesses

  Limitations in clinical trial design, intense market competition

  Risks

  HARMONi-3 trial failure, insufficient market demand

Key data

• HARMONi-3 Trial PFS HR>0.67-0.71Based on external data analysis
• HARMONi-6 Trial PFS HR0.60Confirmed
• HARMONi-3 Trial OS IA Boundary0.71-0.75Second half of 2026
• HARMONi-3 Trial OS FA Boundary0.812027
• SMMT Target Price7.70 USD56% below current price

Impact & implications

The report believes that failure of the HARMONi-3 trial would negatively impact SMMT’s future development, despite some upside risks—such as achieving a positive OS outcome or acquisition by a large pharmaceutical company. However, given the trial’s design limitations and intensifying market competition, the report remains cautious on SMMT’s outlook. Investors should closely monitor the disclosure of final trial data and subsequent market reactions.

Risks

• HARMONi-3 trial fails to demonstrate statistically significant overall survival benefit
• Intensifying market competition affecting market share

What to watch

• Release of final HARMONi-3 trial data
• Changes in market demand for the drug